The pending sale of the Battery Hotel to Memorial University is raising questions among some in the tourism industry who are worried about the loss of hotel rooms.

Cathy Duke, the CEO of Destination St. John's which markets the city as a tourism destination, said news of the deal came as a big surprise. 

"We were speculating about the purchaser for the hotel," said Duke. "Certainly we would have hoped to see it redeveloped and expanded for a hotel property. That's always good for our business."

If The Battery ceases to be a hotel, 125 hotel rooms will dissapear.

"The level of awareness of Newfoundland and Labrador as a tourism destination is growing rapidly," said Duke. "So there is a very high demand in the city right now for hotel rooms, and certainly in peak periods the demand does exceed the supply."

More hotels planned

However, St. John's city council has approved seven new hotel developments in recent months, with more than 700 new hotel rooms.

A Hilton hotel on Stavanger Drive, and a Marriott hotel replacing the old Travellers Inn on Kenmount Road are under construction.

The Marriott, with 148 rooms, is expected to open in April 2013.

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Cathy Duke of Destination St. John's says news of the hotel sale took her by surprise. (CBC)

"You could look at it, January to April, that we'll be down the 125 rooms, but I guess you could say it's still an off-season part of the year," said Greg Fleming, president of the Hotel and Motel Association of Newfoundland and Labrador. 

"So I don't anticipate it being too much of a pinch, maybe in the downtown."

Budget options may be limited

But there may be a pinch for visitors who want to stay downtown on a lower budget.

The Battery has, by far, offered the cheapest rooms in the area.

"The downtown is the more expensive area of any market to visit," acknowledged Fleming. "It's a change, but I think in the end things will work itself out.

"And you never know, there could be more hotel projects in the pipeline."